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News : National Last Updated: Jan 4th, 2016 - 20:33:38

JSE stocks pick 2016
By Marston Gordon
Jan 1, 2016, 19:36

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2015 Review
Average price appreciated by 162.04% on the main market in 2015 with gains ranging from a high of 1,084.71% down to 12.5% and an advance decline ratio of 27:5.

The outcome of our 2015 selection was:
Caribbean Cement 689.63% (3rd place)
Kingston Wharves 89.33%
Pan Jam Investment 59.32%
Pulse Investments 757.14% (2nd place)
Supreme Ventures 132.00% (11th place)

2016 Picks
This is our first year of selecting any company from the junior market as it has now come into its own. In 2015 it had gains between 1.3% to 436.0% with all but one stock advancing and none declining.

The markets are unlikely to generate the level of returns we saw in 2015 as stocks rose then from very depressed levels to fair price. The best performers in 2016 will be the companies that are growing revenue, profit and taking any remaining advantage of lower energy costs.

with Tank-weld now on board as a distributor of cement the company has secured almost 100% of the domestic market. Energy prices continues to fall and will flow directly to the bottom line. At the current rate of profit the accumulated deficit should clear within 2 years.

the company has no debt, tax free to 2018, strong positive cash flow, some short-term investment and requires minimal capital investment to grow. In Q1 2016 net profit grew by over 50% compared to the comparative quarter in 2015.

experienced investors know that most proposed mergers happen sooner or later in some form or the other. The objection raised by Mayberry Investments to the RJR Gleaner merger presented a great opportunity to acquire shares of Gleaner and to a lesser extent RJR.
The stock price of Gleaner started 2015 at $0.90 and closed at $1.30 on August 5th prior to the merger announcement. It peaked at $2.74 the following week, pulled back then stabilized around the $2 level to the beginning of December and ironically fell to close the year at $1.30.
The net book value per share is $2.30 and the Q3 2015 YTD earnings are up 100% above the 2014 comparative period.

the annual and quarterly filing of financial statements with the Jamaica Stock Exchange is not only up to date, the first quarter report was filed ahead of the due date. And the good news continue to pile up, Pulse has declared a dividend of $0.06 per share in December 2015, the first payment in 21 years. The stock price is considerably below its net book value of $6.15; the Q1 2016 eps of $0.29 is 45% more than that in Q1 2015.
The challenge with Pulse has not been profitability it has been late reporting and if they consistently file on time over the next while investors will swarm to the stock.

the shareholders have paid a steep price for a bad decision in the purchase of 12 months supply of coffee beans at or near their recent highs. The company has had to work through that inventory and should see them getting back to higher gross margin in 2016 and with expansion in export sales the earning should grow sharply. Salada is one of five laggards on the main market in 2015.

Source: Jamaica Stock Exchange

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